Types of Rental Income
When owners of rental property think of rental income, they typically think that it consists solely of the monthly check (or cash) they receive from their tenant. But, as the infomation below shows, it isn't limited to amounts you receive as normal rental payments.
The following are common types of rental income that is taxable:
Advance Rent: Advance rent is always included in rental income in ther year received, regardless of the period covered or the method of accounting used.
Canceling a Lease: If a tenant pays you to cancel a lease, the amount you receive is rent income and included in the year received, regardless of the method of accounting used.
Expenses Paid By Tenant: If a tenant pays any of your expenses, those payments are rental income. Because you include them in income, you can also deduct the expenses if they are deductible rental expenses.
Property or Services: If you receive property or services as rent, instead of money, include the fari market value of the property or services in rental income.
Security Deposits:If you plan to return a security deposit to your tenant at the end of the lease, don't include it in rental income. But if you keep part or all of the security deposit during any year, for whatever reason, include the amount you keep in your rental income in that year.
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